We Owe It To Our Kids To Create An Estate Plan

 “One thing about having a baby is that each step of the way you simply cannot imagine loving him any more than you already do, because you are bursting with love, loving as much as you are humanly capable of- and then you do, you love him even more.” –Anne Lamott, Operating Instructions: A Journal of My Son’s First Year

If you’re a parent, then this sentiment probably resonates with you deeply. Our love for our children changes everything about the way we view the world, and this love drives us to stop at nothing to keep them safe. Our job is to guide, teach, and shield our children through the dangers of life until they grow up to be independent adults.

We believe part of that responsibility means taking legal steps to ensure your child is protected, even if you aren’t around to do it yourself.

Estate planning is just that. It means putting a plan in place to ensure your child’s security no matter what.

Below, you’ll find five ways you can use estate planning to protect your kids and ensure they are cared for no matter what:

ONE: Name A Guardian To Love And Care For Your Minor Child

Name a guardian and backup guardian for any of your children who are still minors. This guardian will have the legal right to custody of your child should something happen to both you and the child’s other parent.

Picture this scenario: You and your spouse are in a car accident, and both of you pass away. What’s the protocol for who takes care of your children? If you don’t have a guardian set up,  Child Protective Services would take custody of your child. He or she may then be placed in foster care until a local court decides who should get custody of them.

While it is important for the state to have a system take care of orphans, most people wouldn’t want their child to be placed with strangers during such a traumatic time. But if you correctly name a guardian, Virginia law requires Child Protective Services to give that person immediate and permanent custody of your child.

We recommend you state both a primary and contingent guardian in your will to ensure someone you choose is available to care for your child in the unlikely event that they are left without both parents.

TWO: Create A Minor’s Trust To Protect Your Child’s Financial Future

By law, children are not in control of their own funds until the age of 18. If you die before your child reaches that age, they won’t be able to access any money or other assets you leave them until their 18th birthday, at which time they’ll have complete control of everything.

But think about it – what child, at 18, should realistically oversee large amounts of money? Your kid might be incredibly responsible, but if they received your life savings right out of high school, the temptation would be enormous.  

To avoid this and to protect your child’s financial future, we recommend you add a minor’s trust to your Last Will and Testament.  

A minor’s trust is a mini-trust inside your will which states that your child will not receive any money from your estate until a certain age (normally 25, but you get to choose).  Until then, a trustee (selected by you) manages the money for the child’s benefit. This trustee can sensibly distribute funds for things like your child’s education, travel, medical bills, and other living expenses. 

THREE: Designate Beneficiaries To Protect Your Child

Think of your will as the default rule of thumb for what will happen to your money and possessions. But certain assets are exceptions to the rule. 

For example, if you state in your will that you want everything you own to go to your child, but you have an old investment account that lists your brother or sister as its beneficiary, that beneficiary trumps your will. The invested money in that particular account will go to your sibling rather than your child.

Assets like retirement funds (such as a Roth IRA or 401k) and investment accounts allow you to list beneficiaries on them. If you have a child listed as your beneficiary, these funds will go to them at the age of 18 regardless of any minor’s trust fund you may have set up.

Not only that, but often, taxes have not yet been paid on these accounts.  The government has many requirements for how these accounts must be used, and if your child does not handle them properly, they will incur additional taxes and penalties.

 The last thing you want is for your child to get a large chunk of money at too young of an age, make rash decisions with it, and then have the IRS after them.

To avoid the risk, we recommend that you designate the trustee of your minor’s trust as the beneficiary of all such accounts. That way, all the money from these accounts will pour over into one source which can be used for your child and then paid to them on their 25th (or whatever age you choose) birthday.

FOUR: Select A Power of Attorney to Make Financial Decisions for Your Child

Families find themselves in all kinds of unexpected situations. So what if you don’t die, but you somehow become incapacitated? How will you provide for your child in the event of an accident that leaves you disabled and physically or mentally unable to work and care for them?

You will need someone to shoulder the responsibility of making financial decisions for both you and your child. This is why you should select a financial power of attorney.

A power of attorney gives a trusted family member or friend of your choice the ability to take financial actions for you.  They’ll be able to use your resources to pay bills and buy food for your family.

FIVE: Purchase Disability and Life Insurance to Ensure Your Child’s Financial Needs Are Met

This last aspect of estate planning is perhaps the most important.  You must make sure that you have enough life and disability insurance so that your child (and the rest of your family) are taken care of when you are gone. 

A good insurance agent can assist you in figuring out exactly how much insurance you need. 

But, be careful.  Some dishonest insurance salespersons will try to sell you more insurance than you need.  We recommend that you meet with several different reputable financial advisers or insurance agents in person and compare what they tell you.


 We know your kids are your greatest treasure.  A lot of things in life are uncertain – don’t let your child’s future be one of them. Click here to request your free estate planning consultation today.